CIMB PGAS Volume Growth Remains Intact

Company update - Volume growth remains intact - by Itphong Saengtubtim (PGAS IJ / PGAS.JK, OUTPERFORM - Maintained, Rp2,050 - Tgt. Rp2,550, Utilities)

We are now less concerned about PGAS's ability to maintain its gas selling prices following a recent statement from Indonesia's Minister of Energy and Mineral Resources. PGAS's volume growth has become more of a concern under current economic conditions. We are downgrading our sales volume forecasts due to a drop in sales volume to industrial customers and slower-than-expected offtake by PLN. As a result, we have cut our EPS forecasts by 5-20% for FY08-10.

However, we are still optimistic on PGAS's long-term outlook and maintain our OUTPERFORM rating, albeit with a lower DCF target price of Rp2,550 (from Rp2,650).